Zenith Bank Plc Thursday released its financial results for the nine months ended September 30, 2018, showing a decline in top-line but a growth in bottom-line.
Zenith Bank recorded gross earnings of N474.697 billion in 2018, down by 11 per cent, compared with the N531.2 billion posted by the bank in the corresponding period of 2017.
Its net interest income rose by 13 per cent, from N201.492 billion to N228.517 billion, while fee and commission income stood at N69.967 billion, as against the N71.021 billion posted in 2017. Impairment charges fell 70 per cent from N47.053 billion to N14.338 billion.
As a result, Zenith Bank Plc ended the nine months with profit before tax of N167.307 billion, which is 10 per cent above the N152.552 billion posted in 2017.
Profit after tax improved by 12 per cent to N144.179 billion, up from N129.28 billion in 2017.Customers’ deposits increased from N3.062 trillion to N3.276 trillion, while loans and advances reduced from N2.156 trillion to N1.824 trillion. Total assets improved to N5.618 trillion, up from N5.132 trillion in 2017.
In their review of the third quarter performance, analysts at Cordros Capital Limited said the one per cent uptick in gross earnings was largely on the back of 11 per cent growth in interest income to N110.39 billion. According to them, interest earned on customer loans (+8.35 per cent) and government securities (+44 per cent) were major drivers of the increase in interest income.
“On the other hand, decline in fees & commission income (-30 per cent, -10 per cent quarter on quarter q/q) led to a disappointing net interest revenue (NIR) (-18 per cent, -37% q/q) performance in the quarter. Over the nine-month period, NIR dropped 20 per cent, with trading income, other income, and fees and commission income all recording respective negative growth of 35 per cent , 24 per cent , and one per cent,” they said.
According to them, it is worth stating that the bank recorded a tax credit of N2.5 billion in Q3-18, owing to a deferred tax asset recognition in tax expenses during the period.
“Further clarification on the item will be obtained upon our meeting with management. Nonetheless, the tax credit gave the boost to the bank’s earnings, as pre-tax profit was down 0.7 per cent y/y in the quarter. The Zenith Bank’s Q3-18 result is impressive. Annualised, the N192.24 billion net profit reported as at 9M-18 is above Bloomberg consensus’ estimate for the full year by six per cent , but lags our 2018E by two per cent,” they said.